FTC Fall Technology Series: Smart TV Workshop December 7, 2016 Segment 1 Transcript KEVIN MORIARTY: Good afternoon. On behalf of my colleagues here at the Federal Trade Commission, I'm happy to welcome you to our workshop on smart TV, which is the final installment of the fall technology series. My name is Kevin Moriarty. And I'm an attorney with the Division of Privacy and Identity Protection here at the Commission. Ad my co-organizer for today's workshop is Megan Cox, who's also in the Division of Privacy and Identity Protection. Before we get started with our program, I need to review a few administrative details. Please silence any mobile phones and devices. If you must use them during the workshop, please be respectful of the speakers and your fellow audience members. Please be aware that if you leave this building for any reason during the workshop, you will have to go back through security again. Please bear this in mind and plan ahead, especially if you are participating on the panel so we can do our best to remain on schedule. The restrooms are across the hall just outside the auditorium. The plaza east cafeteria is located inside the building. So you can use it without going through security again. And it is open until 3 PM. Most of you have received a lanyard with a plastic FTC event badge. We reuse these for multiple events. So when you leave today, please return your badge to the event staff. If an emergency occurs which requires you to leave this room but remain in the building, follow the instructions provided over the PA system. If an emergency occurs that requires the evacuation of the building an alarm will sound. Everyone should leave the building in an orderly manner through the main 7th Street exit. After leaving the building, turn left and proceed down 7th Street and across the East Street to the FTC emergency assembly area. Remain there until instructed to return to the building. If you notice any suspicious activities, please alert building security. Please be advised that this event may be photographed, and it is being webcast and recorded. By participating in this event, you are agreeing that your image and anything you say or submit may be posted indefinitely at ftc.gov or one of the Commission's publicly available social media sites. We're happy to welcome those watching via the webcast. We will make the webcast and all workshop materials available online to create a lasting record for everyone interested in these issues. For those of you on Twitter, FTC staff will be live tweeting today's workshop at the hashtag #smartTVFTC. Both panels of the workshop today will leave time at the end for questions. You can ask questions. You can submit questions by tweeting them with the hashtag #smartTVFTC. Or you can fill out a comment, card, which was available at the desk walking in. Or Matt Smith will be patrolling with blank comment cards that you can get from him. And he'll also pick up completed comment cards with questions on them and will bring them to the moderators. Finally as a reminder, the public comment period will be open after the workshop through Friday, January 6th, 2017. I urge anyone giving thought to these issues to submit comments by visiting our website. Lastly I want to thank our panelists for taking part today. We are grateful for your time and consideration of these evolving technologies and consumer issues. Aside from the folks you will see onstage today, this program will not be possible without the great work by Crystal Peters, Fawn Bouchard, and Bruce Jennings, alongside our paralegal support today from Carrie Davis, Matt Smith, Jonathan [INAUDIBLE], Bianca Morris, Joseph Kennedy, and Jennifer Yadu. Thank you all. Now it is my honor to welcome the director of the FTC's Bureau of Consumer Protection, Jessica Rich. [APPLAUSE] JESSICA RICH: Well, good afternoon. And welcome to the Federal Trade Commission's workshop on smart TVs. This is the third installment of the FTC's fall technology series, following our events on ransomware in September and drones in October. We thank you for joining us in person and through the webcast. Just got to get this mic right. So consumers are increasingly turning to the internet rather than traditional television services for video entertainment. Long gone are the days of watching only the major TV networks. And even cable is fighting for its share of the pie. Still adjusting the microphone here. Today we're also watching Netflix, Hulu, YouTube, Amazon Prime, Crackle, Vivo, iTunes, Google Play, and many others. And I'm sorry if you're in the audience and I left you out. Millennials in particular seem to be migrating to these newer services at a very rapid pace. Among those that watch internet video, a full 40% of time in front of the television is spent on these streaming services. And 30% of that time is spent watching ad supported streaming services such as YouTube. Streaming devices like Apple TV or Amazon's Fire TV deliver these internet services directly to consumers' TVs rather than their computers. Manufacturers have added internet connections to their TVs-- now called smart TVs-- to allow them to display these streaming services. And now the innovation is happening in the other direction too, with purveyors of traditional TV services providing their subscriptions over the internet. For example, Comcast's Xfinity app allow subscribers to display their traditional TV subscriptions through streaming devices like Roku. These changes provide enormous benefits to consumers. We're all using these devices. Consumers now have access to a diverse array of content from a variety of TV providers. Internet connectivity also permits fine grained audience measurement, which can help niche video content programmers get ad dollars for programs that may not otherwise have registered as popular using more blunt measurement tools. The tracking of video content also allows services like Netflix to record where you are when you pause a video on one device so you can start it up on another. However smart TVs are also testing the privacy expectations that consumers developed in the era of traditional television. Many consumers have a fundamentally different relationship with their TVs than with their computers. From the moment we bought our first personal computer, there was data collection and data driven advertising. Internet use and online data collection evolved simultaneously. And consumers have come to expect some level of data collection when they use their computers. By contrast the television industry did not evolve with data collection as a critical component. Broadcast signals traveled to households anonymously over the airwaves. Unlike the internet, which requires two way communication, consumers' TV viewing information the something that remained inside the home. So it matters whether consumers think of their smart TV as a computer or a television, and whether they recognize that today it may be both. The incredible number of choices consumers now have in their TV viewing also raises privacy issues. In the 1950s when TV first became prevalent in American households, consumers could only watch two or three channels. As a result there wasn't much to learn about individual consumers from their TV viewing habits. With the arrival of cable and VCRs in the '70s and '80s, consumers had a variety of choices about what to watch on their TVs. And the choices they made became much more interesting to marketers. This information also became much more sensitive as it could provide insight into consumers religious beliefs, political views, and other potentially sensitive topics. In the 1980s Congress recognized that consumer viewing habits were sensitive and passed two laws to protect them. In 1984 Congress enacted the Cable Privacy Act. Then in 1988, following the disclosure of Judge Robert Bork's video rental history by his local video shop to a reporter-- some may remember this-- Congress enacted the Video Privacy Protection Act. These statutes were drafted to apply to the media providers of the day-- cable companies and video rental stores-- and they required consumer consent before any of these entities could control disclose personally identifiable viewing information. I hope panelists today will address the implications of these laws for smart TVs. So what is the role of the FTC here? One role is to highlight the benefits and risks of smart TVs, which is what we're doing here today. Another role for the FTC is to bring law enforcement actions against manufacturers of smart TVs that engage in unfair or deceptive practices. We've been watching this area since its infancy. And we've made clear that basic consumer protection principles apply, just as they do in other sectors. For example, back in 2001, a US Senator asked us, the FTC, to investigate the data practices of TiVo following a public report that raised concerns about the types and amount of information that TiVo boxes were collecting. In a letter to the senator, our then Chairman Pitofsky stated the collection of customers' TV viewing information in a manner that's personally identifiable could raise serious privacy concerns, especially if the practices are deceptively represented. The letter declined to take action, concluding that TiVo either received consent or collected and stored information in a manner that was not personally identifiable. More recently in a comment to the FCC, we highlighted the FTC's potential role in preventing unfair or deceptive privacy practices in the set-top box marketplace. The FCC had proposed a rule making-- I"m sure this crowd is very familiar with this-- to require cable and satellite TV providers to allow access to their content by third party set-top boxes.